19 July 2019

Integrating Low Volatility Trading Into Your Strategy

Integrating Low Volatility Trading Into Your Strategy

To the veteren trader, incorporating low volatility trading into their forex strategy is often deemed incredibly frustrating, as the opportunity to make what are considered to be ‘good’ trades is reduced. Ultimately though, an integral aspect of knowing how to trade forex successfully is recognising how and when to adapt to constantly changing market conditions. Acknowledging this, along with the recent news that central banks are keeping their interest rates lower for longer in 2019, now is the time to clue yourself up on low volatility trading.

In this blog post, therefore, we’re providing both novice traders and forex professionals with a number of tips for how to trade in them.

What is it?


Volatility in forex indicates how much risk is involved with changes in currency exchange rates. So, despite high volatility meaning that a particular currency can change dramatically and, as such, is a bigger risk to trade, there is a greater potential to profit in highly volatile markets – which makes this type of forex trading attractive to day-to-day market players.

In contrast, low volatility markets are considered less desirable as they’re seen as a more conservative approach, due to the potential for big wins being unquestionably lower in this type of market.

4 Strategies for low volatility markets


Given that, currently in the market, there seems to be an increasing mixture of low volatility and lack of trends, it is clear that forex traders are finding it difficult to profit from these types of trades. As a result, traders should ensure they’re adapting their forex strategies to match this type of trading. Below, we’ve detailed the four tips to consider before entering these types of markets.

1. Keep an eye on breakouts

Within low volatility markets, there are sure to be moments when these markets pick up and can usually be predicted to occur after the release of new economic data. As such, it could be worthwhile to trade higher time frame charts or, alternatively, trade at the end of the day.

 2. Repeat trades

Reduce the risk of making big losses or disruptive decisions by, instead of trading all over the market, choosing one side and solely trading on it until it starts to stop working in your favour. Then, once this stops working for you, this is the time you should change your strategy. So remember, don’t switch tactics before ensuring you’ve stuck at your first strategy for long enough to see it through.

3. Target small wins

In low volatility markets, it’s common knowledge that traders won’t be able to make big wins. As such, we recommend focusing on lower profit, more attainable targets instead of thinking of high multiple trades.

4. Remain updated with current affairs

As a general rule, ensuring you pay attention to global current affairs will help you to identify forex signals that have the potential to impact your strategy, rendering you potentially more profitable as a result. So, by keeping up-to-date with news stories from all over the world, you will be in a better position to see how the market has altered itself. Therefore, you can make sure that you’re one step ahead of the game and make trades based on what could happen, instead of waiting for a solid outcome.

Investing time in doing some forex technical analysis, altering your strategy as and when it’s necessary and building up a cache of profits will enable you to take bigger risks when the market inevitably picks up. As such, it’s important to remind yourself that, when facing a low volatility market, trading successfully is still possible. If you’re looking for further methods to develop your forex industry knowledge, or simply to take it back to basics, book a spot at one of our free workshops today.